IN a press conference on Sunday afternoon, May 2nd the Greek Finance Minister Yiorghos Papakonstantinou announced yet another set of austerity measures verified later on the day at a Eurozone financial ministers’ meeting.
The European Central Bank (ECB) chief Jean Claude Trichet stated that the loan to Greece, mostly from the IMF, will reach 110bn euros by 2014 and there will be a ‘reserve fund’ in case Greece needs more cash.
Papakonstantinou stated that this is ‘the highest amount ever provided to a state’ and he hoped that this will ‘secure the largest part of the necessary funds needed by Greece for the next three years’.
He said that funds will be forwarded to Greece every three months under the provision that the terms of the loan are implemented.
Officials of the IMF and of the ECB in Athens said that further measures could be required if deemed necessary.
The Greek ‘socialist’ Prime Minister Yiorghos Papandreou said at an emergency Cabinet meeting on Sunday morning which ratified the IMF-Eurozone loan, that the country faces ‘big sacrifices or disaster’.
The executive council of the ADEDY (public sector trades unions federation) responded by calling a two-day national strike of all public sector workers for Tuesday and Wednesday, May 4th and 5th.
‘Society is becoming a volcano,’ said an ADEDY statement.
According to the ADEDY workers’ and pensioners’ income will be reduced by 35 per cent.
It accused the government for allowing mass sackings, scrapping minimum wage and collective agreements. The GSEE (Greek TUC) leader Yiannis Panagopoulos said that unemployment is to exceed 20 per cent this year.
The GSEE has called a 24-hour general strike for this Wednesday, May 5th.
The Greek Finance Minister listed the following main terms of the IMF-Eurozone loan without providing details.
Public sector workers’ Easter, Summer and Christmas wage supplements, up to now 80 per cent of a worker’s monthly income, are scrapped.
Instead there will be a fixed ‘symbolic’ supplement of 1000 euros in total for a year. This means that a worker on an average wages would lose at least 2000 euros annually.
Likewise pensioners would receive just an annual supplement of 800 euros.
There will be a further eight per cent cut in the benefits received by public sector workers.
Last month they were cut by 10 per cent, which makes a total cut of some 18 per cent. That would mean on average at least 1500 euros taken away annually.
A three per cent wage cut will be imposed on all workers on the electricity, water, telecommunication and gas state enterprises. Last month these workers’ wages were cut by seven per cent.
Thus the total wage cut is 10 per cent. It means that about on average these workers would lose about 1800-2000 euros annually.
A three-year wage freeze is to be imposed.
Papakonstantinou stated that there will be ‘changes’ allowing mass sackings and much less compensation to a sacked worker.
There will also be a reduction in the rate of overtime pay. The Minister did not give any details.
The so-called ‘solidarity supplement’ to poor families is scrapped.
‘High pensions’, again no clarification provided, would be eligible for more tax.
VAT on most consumer goods and all services (including telephone, water, gas and electricity bills) goes up by a further two per cent to 23 per cent; VAT on food goes up also two per cent to 11 per cent.
A further increase of 10 per cent of the Special Tax on petrol, drinks and tobacco is to be imposed.
There will be increased taxation on small property holders; a new ‘green’ tax is introduced.
There would be a colossal cut in public spending, no details were made available.
Privatisation of the Greek railways; the state gas corporation is to assist the development of private gas production and distribution.
The list of ‘unhealthy and heavy’ jobs is to be greatly reduced, meaning the scrapping of supplements to workers in refuse etc.
Huge cuts on local authority spending through widespread amalgamation of Local Councils and Regional Authorities; literally hundreds of thousands are to lose their jobs.
The POE-OTA local government workers trade union was to stage a 24-hour strike on Monday and was set to extend the strike for the rest of the week.
From next year women are to work as long as men, which is to be at least 40 years if they want a pension. Cynically the Greek government introduces a system of ‘automatic adjustment of the pension age according to life expectancy’.
The amount of pension received will not be calculates, as it was up to now, on the basis of the highest wage, but on the average of the 40 years. Some pensions awarded to persons with disabilities will be scrapped.
Papakonstantinou stated that he hoped to ‘save’ some 36.4bn euros off the public sector for the next three years.
The Greek government aim to bring down the budget deficit to eight per cent this year, from over 14 per cent last year, and below three per cent by 2014.
According to various financial institutions, Greece’s public debt is currently estimated to around 320bn euros.
It is not clear if this amount includes the interest on loans. Papakonstantinou admitted that the austerity measures would not have any effect on this; on the contrary Greece’s debt will keep on rising to an incredible 140 per cent of the GNP by 2014.
Then Papakonstantinou hopes that it will start falling.
The new IMF dictated austerity measures are to be rubber stamped by the Vouli (Greek parliament) in record time and become law by next Monday.
Then the Greek government is to introduce a Pensions Bill to destroy the state pension system.